ITI Funds: Investing passively in the Russian markets

Updated: Sep 5, 2018

By Elio Manca, managing director of ITI Funds

ETFs tracking the Russian stock market provide a cheap, highly liquid and diversified exposure to capture this potential upside. On average, Russia ETFs incur a total expense ratio of 0.65% while Russia-focused active investment funds currently charge between 1% – 1.5%.

So far this year, inflows and outflows in Russia ETFs have been in excess of $1 billion, with investors increasing their allocation to Russia to the tune of around $100 million. Added to this, they are moving away from swap-based ETFs to physically-replicating models.

Only one equity ETF outside of Moscow provides exposure to locally listed shares, tracking the RTS Index, while all the others track narrower indices based on ADR/GDR shares comprising between 15 and 28 companies.

The ITI Funds RTS Equity UCITS ETF SICAV (RUSE LN), launched in February this year, tracks the RTS Index, physically investing in 45 local shares. This offers a greater diversified exposure as well as good liquidity, with the RTS Index being the index that underlies Russian future contracts.

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